REPORT: COMPETING HOSPITALS HOLD DOWN COSTS

Increased competition may be forcing Florida hospitals to hold down their costs for the first time in history.

That is the tentative conclusion reached by a former University of South Florida professor who compared the budgets of Florida hospitals in 1983 and 1984 and found that hospitals may have started holding the line on their expenses.

"We feel like it may be a shift (to competition). That will make some difference to consumers," said Stephen L. White, who prepared the new report on hospital competition for the state Hospital Cost Containment Board, the agency regulating hospital budgets.

White is the newly appointed executive director of the South Florida Health Action Coalition, a group of Broward and Dade county businesses that have combined efforts to hold down the cost of their employees' health care.

White said that in the past, hospitals relied on doctors to bring in paying patients. Rather than keep down their prices, hospitals competed by making themselves more attractive to doctors.

"The way they do that is to get lots of fancy medical equipment and amenities," he said.

But starting in 1984, several dramatic changes in the nation's health care system forced hospitals to hold down costs and offer lower prices to at least some patients, according to White.

These changes included the growth of health maintenance organizations and similar preferred provider organizations, new Medicare regulations that limited spending on hospital care and increased efforts by business to hold down the cost of employee medical benefits.

White's study of 1983 financial data from Florida hospitals showed that hospitals in highly competitive areas actually had higher charges than other hospitals. But 1984 data showed that hospitals faced with competition no longer were raising their rates.

In areas with independent walk-in surgery centers, one indicator of competition that White used, hospitals actually lowered their charges.

Among White's other findings:

-- For-profit hospitals are consistently more expensive than non-profit hospitals, and especially government-operated hospitals. The most costly for- profit hospitals were in Dade, Broward and Palm Beach counties.

-- Hospitals profited substantially in 1984 from Medicare, even though Medicare had placed limits on the length of hospital stays it would pay for.

Jim Bracher, executive director of the Hospital Cost Containment Board, said at least another year of data will have to be reviewed before the board can say that competition is having an effect on holding down hospital costs.